Calculate your commercial mortgage.

Buying your own commercial property is a logical step for many entrepreneurs: instead of paying rent, you build up your own equity. A commercial mortgage finances that purchase. Use the tool above to calculate how much your business can borrow, and read below how a provider assesses such an application.

What is a commercial mortgage?

A commercial mortgage, also called a business mortgage, is a loan you use to buy, renovate or refinance a commercial property. Think of an office, a shop, an industrial unit or a practice space. The property itself serves as collateral. A commercial mortgage works broadly like a residential mortgage, but the assessment is not about your salary, it is about the financial health of your business.

How much can you borrow for a commercial property?

With a commercial property you usually finance a lower share of the value than with a home. In practice you often borrow around 70 to 80 percent of the market value, and for easily marketable properties sometimes a little more. You contribute the remaining part from your own funds. So count on equity of roughly 20 to 30 percent of the purchase price, plus the buyer's costs.

Exactly how much you can borrow depends on the type of property, the location and how easy it is to sell. A property that is easy to let in a sought-after spot is easier to finance than one that is strongly tailored to your own business, because the bank looks at the value in the event of a possible sale.

How does the provider assess your application?

Where your income is central with a residential mortgage, a provider mainly looks at the figures of your business with a commercial mortgage. The most important points:

• Your annual accounts and the profit and loss statement over the past years
• The cash flow: can you structurally cover the interest and repayments?
• The sector you operate in and its prospects
• A well-founded business plan or a forecast in case of growth or renovation
• The value and marketability of the property as collateral

Term, repayment and interest

The term of a commercial mortgage is usually shorter than that of a residential mortgage, often between ten and twenty years. Providers like to link the term to the expected economic lifespan of the property. You typically repay on an annuity or linear basis, sometimes with an interest-only portion.

The interest is generally higher than with a residential mortgage. Business financing carries more risk, and the bank factors that into an interest surcharge. The level depends on your figures, the term and the ratio between the loan and the value of the property.

For own use or as an investment

If you buy the property to house your own business in it, the bank mainly assesses whether your company can carry the costs. If you buy the property to let it to another business, the expected rental return weighs more heavily. In both cases the interest you pay is a business expense that you can deduct from your profit. This is separate from the mortgage interest deduction that applies to an owner-occupied home.

Frequently asked questions

Is the interest on a commercial mortgage deductible?

The interest is a business expense and you may deduct it from your company's profit. This runs through income tax or corporation tax and is separate from the mortgage interest deduction for private homes.

How much own money do I need?

Count on equity of around 20 to 30 percent of the value of the property, plus the buyer's costs. With a guarantee scheme such as the BMKB, less own money is needed in some cases.

Can I get a commercial mortgage as a self-employed person?

Yes, you can also apply for a commercial mortgage as a self-employed person or sole trader. The bank then looks at your figures and your cash flow. You often co-sign privately, which means you are also personally liable for the loan.

What is the difference with a regular mortgage?

A residential mortgage is assessed on your personal income and offers higher financing (up to 100 percent) and a lower interest rate. A commercial mortgage is assessed on the figures of your business, offers lower financing and a higher interest rate.

Expert advice for entrepreneurs

Want to know exactly what is possible in your situation? Calculate your commercial mortgage above and request a free, no-obligation conversation with one of our advisers. You can also come to us for a mortgage for entrepreneurs for your own home.